Default

Definition

  • The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.

Synonyms
neglect, deficiency, lack, disregard, miss, lapse, failure

Related Terms and Acronyms

  • Bad Credit Definition,
    • Someone who carries a higher credit risk.
  • Bad Credit Loan Definition,
    • A loan taken out by someone with bad credit.
  • Credit Risk Definition,
    • The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
  • Delinquency Definition,
    • Failure to make mortgage payments when mortgage payments are due.
  • Forfeiture Definition,
    • Loss of property because of violation of law or contract.
  • Good Credit Definition,
    • Someone who carries little credit risk.
  • Guarantee Definition,
    • An enforceable warranty on the promise of quality of a product or formal promise by one person to take responsibility for the debts or obligations of another person if that person fails to meet them.
  • Guaranty Definition,
    • A promise to assume responsibility for a debt if the borrower defaults.
  • Mortgage Acceleration Clause Definition, Important,
    • A provision of a loan agreement that lets a lender demand payment of the full balance under specified circumstances, such as sale of the property, default or refinancing. Not commonly used in Canada and/or Canadian lenders.
  • Mortgage Disability Insurance Definition, Important,
    • Insurance that covers mortgage payments if a policyholder becomes disabled.
  • Mortgage Insurance Definition, Very Important,
    • Insurance that protects a lender if a homeowner fails to pay off his or her mortgage.
    • A policy covering a mortgagor from which the benefits are intended (a) to pay off the balance due on a mortgage upon the death of the insured, or (b) to meet the payments on a mortgage as they fall due in the case of his death or disability.
    CanEquity offers mortgage insurance.
  • Non-recourse Debt Definition,
    • A loan secured by collateral where the borrower is not personally liable.
  • Notice of Default (NOD) Acronym, Important,
    • The step in the foreclosure process where the lender informs the court that the borrower is in arrears.
  • Power of Sale Definition,
    • The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
  • Repayment Plan Definition,
    • Modification of an existing loan after the borrower has been delinquent. Often used when the borrower misses payments but the lender does not foreclose.
  • Repossession Definition,
    • The taking back of property after a borrower has stopped making payments.
  • Restructured Loan Definition,
    • A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Not a normal practice in Canada.
  • Sub-prime Borrower Definition,
    • A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
  • Sub-prime Mortgage Definition, Important,
    • A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
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